Impact of real exchange rate volatility on foreign direct investment inflows in Brazil

• Autor(a) principal: Martins, José Filipe de Sousa
• Data de Publicação: 2015
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/11412
• topic: Foreign direct investment; Real effective exchange rate volatility; Brazil; ARDL Models; Investimento direto estrangeiro; Volatilidade da taxa de câmbio real efectiva; Brasil; Modelos ARDL

This study aims to examine empirically the impact of the real effective exchange rate volatility on Brazilian foreign direct investment inflows from 1976 until 2013. Researches focusing on this relationship have been showing no consensus regarding how significant and what kind of influence (negative or positive) REER volatility has on alluring or keeping away foreign investors from investing in a specific country. It has not been subject of investigation for Brazil using aggregated data and a time series econometric analysis. By including 6 more determinants (GDP growth, population growth, trade openness, inflation, information infrastructure, and financial development) it was possible to conduct a statistical analysis to explain the Brazilian FDI Inflows. The ARDL model was used to estimate both short and long-term effects, given we have a set of variables of order zero and one. Empirical findings revealed that in both short and long-terms, REER volatility has a statistically significant negative impact on Brazilian FDI Inflows. This study also finds, in the long-term, statistical significance as regards to the variables population growth, trade openness, inflation and information infrastructure, and in the short-term, the variables GDP growth, trade openness, inflation and information infrastructure. Keywords: